The Average Time Between Trades for a High-Frequency Trading Investment

question 100

Multiple Choice

The average time between trades for a high-frequency trading investment firm is 40 seconds. Assume the time between trades is exponentially distributed. What is the probability that the time between trades for a randomly selected trade and the one proceeding it is more than a minute?

• A) 0.2231
• B) 0.4869
• C) 0.5134
• D) 0.7769

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Definitions:

Transaction Posted

The act of recording a financial transaction in the accounting records of a company.

Debit

A ledger entry contributing to the growth of assets or lessening of liabilities in a company's financial statement.

Credit

The provision of resources (such as money) by one party to another party where the second party does not reimburse the first party immediately, but promises either to repay or return those resources at a later date.

Transposition Error

A common accounting mistake where numbers are mistakenly reordered, leading to inaccurate data entry.